In California, those who supply raw materials for use in a manufacturing process and integration into an end product cannot be held liable for injuries caused by the end product when (1) the raw material is not defective; (2) the raw material is sold in bulk to a sophisticated manufacturer; (3) the manufacturer employs a manufacturing process that substantially changes the raw material; and (4) the supplier does not participate substantially in the design of the end product. Liability for the decision to use potentially dangerous raw materials is placed on the maker of the end products and not on the suppliers who are selling materials that may be dangerous but can also be integrated safely into end products.
On November 23, 2015, the NAM sent an amicus letter the California Supreme Court urging it to review the decision of a lower court that departed from settled principles of liability. The lower court failed to apply the established legal framework to evaluate the alleged liability of U.S. Steel as a supplier of a raw material that was incorporated into the end product the allegedly caused plaintiffs’ injuries. The court also assumed that the “consumer” expectations test should be used to evaluate whether the raw material is defective. U.S. Steel acted solely as a bulk supplier of a raw material to a sophisticated purchaser, the raw material was not defective, and U.S. Steel was not involved in the design, manufacture, or distribution of the end product.
On December 14, 2015, the California Supreme Court left standing this ruling, which will have serious adverse consequences for manufacturing and commerce. The NAM has a strong interest in the development of tort law and the application of doctrines that place reasonable limits on strict product liability claims.